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A couple of days after NVIDIA essentially declared an all-out war on the chip sector with its Tegra 4i chip, Qualcomm answered. But the tech giant didn't just care to retaliate. Qualcomm has plans to demolish its rivals. In the process it wants to fatten up the pockets of its investors, while also saving its OEM partners potentially billions in production costs. In return, Qualcomm should see its stock advance 25% from current levels -- it's just a matter of time.

When Qualcomm reported first-quarter earnings several weeks ago, it was reassuring that amid such "doom and gloom" from likes of Texas Instruments, Qualcomm guided above prior fiscal Q2 estimates for revenue and EPS. Now we know why. Chances are, guidance will now prove too conservative. On Thursday, the chip giant shook an already shaken sector by announcing a revolutionary chip, the RF360 Front End Solution, which eliminates radio frequency band fragmentation -- the biggest headache for device manufactures.

Essentially, Qualcomm has combined all of the LTE platforms into one chip family. And by improving the RF performance, which now supports all seven cellular modes, this means that one platform can now function on every network. Now, OEMs such as Apple do not have to manufacture three versions of its iPhone 5 just to support multiple carrier frequencies. This is great news for Apple and Samsung, but bad news for chip competitors. Shortly after Qualcomm's announcement, shares of rivals RF Micro Devices and Skyworks Solutions plummeted 14% and 13%, respectively.

Qualcomm said the new chip should be available by the second half of this year. I would be surprised if it's not in the new iPhone. The question, though, is why would any device manufacture consider an alternative? The potential cost savings and logistics should spur margins higher. What's more, that the chip will have a smarter tuner, improved power consumption and better heat reduction, it should also save device manufacturers on after-purchase support and warranties.

For Qualcomm, this is truly a game-changing and competition-killing product. But what does it mean for the company in the near term? Given the Street's propensity to scream "cannibalization" each time Apple announces a new product, it seems logical to expect a similar effect on Qualcomm. Why would device manufacturers not consider postponing orders until the second half the year once the RF360 hits the market? This means the next couple of quarters from Qualcomm might be softer than usual.

We do know for certain that the new chip won't be available in Samsung's new phone, the Galaxy S IV, which is slated to hit the market next month. This presents an advantage to Apple, whose product cycle aligns perfectly with Qualcomm's release. And if you consider that Apple might also release a cheaper iPhone, Apple should certainly gain market share from Samsung in the next two quarters. So I would be buying shares of Apple here as well, since there's now a good chance that its unit growth should outperform.

In the meantime, this new chip should eliminate concerns about Qualcomm's operating leverage and margin pressure from Broadcom . Even though Broadcom's management guided for 8.2% growth in Q1 revenue, it still suggests 5% sequential decline. And the company has already received the Street's forgiveness after a "less bad" quarter. So, if we can agree that Qualcomm might suffer some cannibalization effects, it also makes sense to assume that Broadcom would see a decline in orders. For that matter, so should NVIDIA, even though the company recently boasted about taking market share at any cost.

However, this will be hard to do given Qualcomm's already 52% market share in baseband chips. Plus, Qualcomm projecting 17% growth in handset licenses for this year means that company plans to squeeze every bit of business it can in the market. Logically, if we can expect a weak next couple of quarters from Qualcomm due to soft orders, we should assume worst for rivals. But for now, the company is setting new standards, while pioneering the transition between device generations. Remarkably, at one point, investors were worried that Qualcomm was funneling too much of its profits back into research and development. Clearly these R&D investments are about to make investors very wealthy.

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